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The Google tax

Actually, there are two.

The first is the tax we each pay so that companies can bid against each other to buy traffic from Google. Because their revenue model is (cleverly) built on both direct marketing and an auction, they are able to keep a significant portion of the margin from many industries. They’ve become the internet’s landlord.

The difference between a successful business in New York and an unsuccessful one is just a few percentage points–the successful ones pay 95% of their profit to landlords, while the unsuccessful ones pay 105%.

It doesn’t matter if there are competitors to Google in search: the model of bidding for attention is so economically compelling (because attention is so scarce), that companies are going to be paying ever more to reach people in this way–or allow their competitors to do so.

The second is harder to see: Because Google has made it ever more difficult for sites to be found, previously successful businesses like Groupon, Travelocity and Hipmunk suffer. As a result, new web companies are significantly harder to fund and build. If you’re dependent on being found in a Google search, it’s probably worth rethinking your plan.

The open web (and search… particularly Google) has created huge benefits in access, competitiveness and selection for so many markets. At the same time, there are structural challenges that are making the future less commercially interesting in many ways.

Capitalism is an efficient system for surfacing and addressing the needs of consumers. But once it veers toward control over markets by a single entity, those benefits disappear.

The existence of DuckDuckGo doesn’t significantly change Google’s position as a monopoly able to dictate how most people experience everything on the web.

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